Chicago v. President

• Citation: 84 Ill. 643,1876 WL 14037
• Parties: CHICAGO, PEKIN AND SOUTHWESTERN RAILROAD CO.v.PRESIDENT AND TRUSTEES OF TOWN OF MARSEILLES.
• Decision Date: 31 January 1877
• Court: Supreme Court of Illinois

84 Ill. 643

1876 WL 14037 (Ill.)

CHICAGO, PEKIN AND SOUTHWESTERN RAILROAD CO.

v.PRESIDENT AND TRUSTEES OF TOWN OF MARSEILLES.

Supreme Court of Illinois.

January Term, 1877.

OPINION TEXT STARTS HERERAILWAY COMPANY-- power to purchase shares of its own stock.

Upon a rehearing in this case, the rule as laid down in the original opinion reported in this volume, page 145, is reaffirmed in the following additional opinion: Per CURIAM:

On considering the petition heretofore filed, we granted a rehearing to further consider the question, whether the railroad company had the power to contract for and purchase shares of stock of its own company. We have again fully examined the question, and, after considering the arguments and authorities bearing on the question, we will proceed to announce our conclusions thus reached.

The rule is familiar, and is not contested, that such bodies can only exercise such powers as may be conferred by the legislative body creating them, either in express terms or by necessary implication; and the implied powers are presumed to exist to enable such bodies to carry out the express powers granted, and to accomplish the purposes of their creation. Such being the rule, the question arises, whether this corporate body might make such a purchase, or is it outside of, and beyond the limit of its power?

Appellant has referred us to a number of cases in our own court, in which it has been held that such organizations have no power to release subscribers for their stock from paying therefor and from their subscriptions; that, when such subscriptions are intended to be fictitious or the subscribers are released from payment, it operates as a wrong, if not a fraud, on the other subscribers for stock in the same company. But here, the stock had been subscribed, paid for, and certificates thereof issued to, and they were owned and held by, the village at the time this contract was entered into and executed. So, the question is not, whether appellant may release the village from paying for and receiving shares subscribed for, but whether appellant has power to purchase shares of its own stock, paid for, issued to and held by the village.

In the case of Taylor v. Miami Exportation Co. 6 Ohio, (Hammond's R.) 83, it was held that a banking corporation might lawfully receive shares of its own stock from a solvent debtor in discharge of his indebtedness. The court went further, and held that, where a large number of shares had been issued to enable the holder to vote for certain persons for directors at an approaching election, and, after the holder had thus voted, the money paid for the shares was returned to him, and he restored the shares to the bank, as there was no loss sustained by the transaction, and the result of the election was not changed,...